Companies may license their name, operating procedures, operational systems and marketing materials to individuals or organizations to allow those individuals or organization to operate a business under the name of the company. A franchise is one model for this approach, but a franchise isn't the only model.
In this arrangement, the operator may make an initial investment, which can be fairly substantial, and the company may also make an investment, and then the operator then runs the business under the company's name with guidance and assistance from the company.
If the operator does not maintain certain standards, or simply wishes to stop running the business, the company may have the right to take over the business or transfer it to another operator. Because the operator does not have rights in the name, but was only licensed to use the name, when the company takes over operation of the business from the operator, the customer goodwill, which may be centered largely in the name of the company, usually follows the business. If the operator that was formerly operating it starts a similar business, the customers of the old business will not typically follow the operator to that new business because of the fact that the goodwill built up over the time the business was operated remains in the business name. Because the goodwill is at least in part a result of the name, marketing materials and operational systems, all or most of which are developed and maintained by the company, the fact that the goodwill reverts to the company protects their investment in the name, marketing and operational systems they provide.
Without being able to protect their investment in their name, marketing, and operational systems, most companies could not license them profitably. This is because their value to the operator that licenses them from the company is highest when used to acquire customers and learn how to run the business. Once that has been done, their value is reduced. If a company licensed these things to an organization or individual and was not able to retain the goodwill, the operator would license them only for a brief period of time, then set up a different company and take the customers of the old company with them. Additionally, setting up an office can represent a substantial investment as a bare office is transformed into one that looks like a business, with furniture, décor, and the like, and much of that investment would not be worthwhile to recover if it were used for only a short time. Although a company in this situation could charge higher up front fees to compensate operators for the brief period of time they were allowed to benefit from their name, marketing and operational systems, the fees would have to be so high as to discourage most individuals or organizations from entering into these types of arrangements.
However, there are some business that don't fit into this arrangement. For example, those businesses in which repeated, personal contact is employed by a single individual don't work well using the arrangement described above. One reason such arrangements don't work well is that more of the goodwill is personal, which means that the company has no way of protecting its investment in its name, marketing and operational systems, because some or all of the goodwill can move with the operator if the relationship with the company is terminated. As a result, a party licensing its name, marketing and operational systems to an operator in this arrangement may require much more of the costs, including the cost of transforming an office into a professional space to be borne by the operator to whom such things are licensed. Because that individual usually doesn't have sufficient capital to pay very much when starting out, instead of charging more, the amount of money the company may invest in office transformation, marketing and operational systems that can benefit them can be minimal. As a result, the items licensed may not be very valuable, and so the business may suffer as a result.
What is needed is a system and method that can allow a company to license its name, marketing and operational systems while protecting its investment in such items.